In its 10-Q Tesla has pointed out that the lithium ion battery
cells "have been observed to catch fire or vent smoke and flame,
and such events have raised concerns, and future events may lead
to additional concerns, about the batteries used in automotive
applications."

Tesla has repeatedly pointed out that these fires were the result
of accidents and were not "spontaneous," but battery concerns
have weighed on the stock. CEO Elon Musk took to the Tesla Motors
Blog to defend his car. "For consumers concerned about fire risk,
there should be absolutely zero doubt that it is safer to power a
car with a battery than a large tank of highly flammable liquid,"
Musk wrote.

Investors and traders also punished Tesla
after its earnings report. The company delivered 5,500 Model
S vehicles in the third quarter and said it's producing 550 cars
per week. While this is up from 5,150 deliveries in the second
quarter and a production rate of 500 vehicles per week, this fell
short of analysts' expectations.

Because the company is still young, investors are focused on
vehicle deliveries over performance on the
bottom line.

But investors are just as antsy about the supply chain as they
are about demand for the product. The recent
agreement with Panasonic to produce 2 billion lithium-ion
battery cells through 2017 has helped alleviate some of the
concerns. But there are other supply chain bottlenecks that some
analysts argue could be its biggest risk over time.

Then there is the stock's valuation.

Price targets on Tesla run the gamut. Deutsche Bank's Dan
Galves has a price target of $200, while Goldman
Sachs' Patrick Archambault has a price target of
$95.

"We believe that there has understandably been significant
profit-taking over the last few weeks by investors that have made
substantial returns over the last 6 months," Galves explains. He
thinks "investor turnover may continue."

Miller
Tabak

"Sellers unleashed about 31 million shares in Tesla Motors
midweek," Andrew Wilkinson of Miller Tabak pointed out following
the Q3 earnings release.

The last two times we saw such volume, shares closed lower but
"subsequently rose despite the high-volume sell-offs," Wilkinson
told Business Insider. "Question is whether or not this time its
prospects are more sinister."

Musk told Bloomberg TV, "we're going to do our best to
fulfill the expectations of investors and I think, in the
long-term, that stock price is going to seem fair. It's difficult
to predict where it goes in the short or medium-term but I do
feel good having the company achieve that value and more in the
long term."

While the company has disruptive technology that gives it "the
potential to be at the leading edge of a paradigm shift in
transportation," as Galves points out, there are still numerous
risks to be aware of: The company's production chain is one,
long-term demand is another, and cash generation another, to name
a few.

Until investors can realize the long-term value, Tesla might be
whipsawed by speculators.